Models of brain drain and brain gain

This section develops a model of brain drain and brain gain that shows selection into higher education and migration based on the costs of education and differential returns to education in the destination and origin countries. The model is similar to the selection models presented in Chapter 4. In this framework, skill or education levels increase and high-skilled emigration occurs if the marginal benefits to potential migrants outweigh the marginal costs.

Figure 11.3 depicts the model graphically. The horizontal axis indicates the level of human capital (H), or skill, in the origin. The vertical axis shows the marginal cost (MQ and the marginal benefit (MB) of acquiring human capital. The marginal cost of acquiring human capital is assumed to be constant and therefore is depicted by a horizontal line. The downward-sloping lines represent the marginal benefit to acquiring human capital in the origin (MBo) and in the destination (MBd). The marginal benefit

Box п.2 Feminization of migration: The impact on brain drain, remittances and children left behind

As emigration rates of women have risen, so have studies of the feminization of brain drain, remittances and families left behind. Maelan Le Goff (2016) brings these issues to the forefront. She points out that women have been a substantial share of migrants for quite some time; for example, the share of female migrants has been more than 50 percent in Europe for the past several decades. While emigration rates for skilled workers have increased for decades, emigration rates among skilled women are higher than men, especially from low-income countries. Emigration rates for high-skilled men and women are nearly identical in OECD countries, at 8.6 percent in 2015/16 (d'Aiglepierre et al., 2020). However, for non-OECD countries, the emigration rate for highly skilled women is 19.8 percent, versus only 16 percent for men. Thus, high-skilled women from relatively poor countries are more likely to emigrate than high-skilled men from those same countries. One reason for the high emigration rate among high- skilled women is that there are not as many skilled women workers to begin with, so those who emigrate make up a bigger share of the skilled female labor pool.

Remittances from female migrants, particularly skilled women, are a sizable and reliable source of income for source country families. Women transferred $300.6 billion in remittances in 2016, almost half of the $601.3 billion global total (Western Union, 2016). At the macro level, studies find a positive relationship between female migration and remittances; this correlation is higher if focusing on college-educated women. At the micro level, women have a greater propensity to remit but remit smaller amounts each time. That said, women send a larger percentage of their salary back home (Caritas Internationalis, 2012). These patterns may be due to their reasons for remitting. Women are more likely to be altruistic toward their family and to have strong ties to family members back home. Some also want to have a fall back or insurance option to return to their family in their country of origin.

Family structure is often disrupted when a migrant leaves a family behind, especially if the migrant is a mother. Left-behind children are a common occurrence in the global South. For example, in the Philippines, nine million children have at least one parent working abroad (Maymon, 2017), and the number is as high as 69 million in China for children ofinternal migrants (UNICEF, 2019). Children of migrants tend to fare worse than those whose parents stayed home. The negative effect is greater if the migrant is a mother (Cortes, 2015; Yanovich, 2015).

Furthermore, not all women migrants are skilled and highly paid and send remittances. Many face difficulties in the labor market of the destination countries. Le Goff calls this the “double disadvantage” of being a migrant and a woman. For example, many enter the labor markets as temporary domestic workers and face poor working conditions and skill underutilization. Some are unauthorized and work as caregivers or domestic workers without labor protections. Due to gender stereotypes that women are compliant and hardworking, women are considered ideal candidates for manufacturing jobs. Employers assume women are not the primary income earner, so they pay women less than men. Women are less likely to organize unions, and they are more often deemed easily replaceable (Maymon, 2017).

The heterogeneity of women, their labor market experiences and their reasons for migrating all make it clear that the increasing “feminization of migration” is a complicated situation and one that policymakers should consider.

Figure n.3 Model of brain drain

When migration is not possible, the optimal level of human capital in the origin is Ho. When migration is possible, people with levels of human capital above H* migrate, and the optimal level of human capital in the origin rises to Hd.

to acquiring human capital is always positive but decreases as the level of human capital rises. This means wages increase with human capital but at a decreasing rate. People acquire human capital if the marginal benefit exceeds the marginal cost. The optimal level of human capital acquisition for a representative agent in the origin absent the possibility of migrating is then Ho.

In Figure n.3, the marginal benefit to human capital is flatter in the destination than in the origin. The destination has higher returns to human capital than the origin. Migrants are therefore positively selected, as discussed in Chapter 4. People with levels of human capital above H* migrate, and people with levels of human capital below H* remain in the origin. Brain drain occurs. Further, the possibility of migrating increases the optimal level of human capital acquisition in the origin from Ho to Hd. Since the origin bears much of the costs of human capital acquisition, such as through funding public schools, migration is costly for the origin country.

Figure 11.4 Model of brain gain

The destination restricts immigration to migrants with levels of human capital above Hr, creating the notch in marginal benefits shown by the thicker gray line. People with levels of human capital between Ho and Hr overinvested in human capital.

More realistically, only part of the skilled workforce migrates. Figure n.4 depicts this situation. As earlier, the possibility of migrating and earning a higher return to human capital increases the optimal level of human capital from Ho to Hd. However, suppose only people with levels of human capital above Hr, not H* actually migrate. The destination might restrict immigration to people with very high levels of human capital, for example. This would create the notch depicted by the thicker gray line in Figure n.4. If potential migrants do not anticipate the restriction, some overinvest in human capital. These “overinvestors" have human capital levels between Ho and Hr. While this might be suboptimal for those thwarted migrants, it might be beneficial for the origin country since its population now has more human capital, on average. At least one brain gain channel discussed in the next section links brain gain to increased human capital acquisition in the origin country.